TheChek News Flow

Investors bet on tech revolution to disrupt global mining

Kobold Metals uses AI and machine learning to find new deposits of critical metals

A group of investors is betting that the $1.6tn global mining industry is set to undergo the sort of digital disruption that upended the media, music and automotive industries.

T Rowe Price, Bond Capital and a dozen other investors have raised $192mn for a Bill Gates-backed start-up called Kobold Metals, which uses artificial intelligence and machine learning to find new deposits of critical metals needed for batteries and clean energy.

It comes as demand for battery metals such as lithium and nickel is expected to surge as electric vehicles become mainstream over the next two decades.

Silicon Valley-based Kobold estimates that more than $10tn of lithium, cobalt, nickel and copper needs to be mined to meet the coming demand for electric vehicles — a figure that will see a growing number of traditional mining companies turn to AI to help with the challenge.

BHP, the world’s biggest miner, and Norway’s state-backed energy company Equinor have already partnered with Kobold, and their venture capital arms are both investors.

In an interview with the FT, Kurt House, chief executive at Kobold, said mining discoveries have been getting slower and more expensive over time, reflecting what he called Eroom’s Law — the opposite of Moore’s Law.

“In the last 30 years, the number of discoveries per dollar of exploration capital has declined by six times,” he said. “So if you increased your budgets by six times, you’re going to find things at the same rate you found them in 1990.”

Low-hanging fruit locations where minerals can be seen from the surface have largely been found while exploration for harder-to-find minerals is chronically underfunded.

For example, BHP paid $15bn in dividends last year, but spent only $75mn on exploration.

Named after the German word for a goblin that controls the earth’s minerals, Kobold was already backed by Andreessen Horowitz and Bill Gates’s Breakthrough Energy Ventures fund.

Its latest funding round came after the start-up was able to demonstrate that its technology had successfully predicted the composition of bedrock in northern Quebec, finding valuable minerals in an area dismissed by conventional approaches as “non-prospective.”

Kobold collects vast troves of historical and scientific data and uses algorithms to identify where mineral deposits might be below the earth’s surface.

Its technology includes machine learning tools to sift through 20mn pages of documents in the public domain — including two centuries worth of mining rights’ agreements in countless jurisdictions — that it sorts, digitises, and streamlines into accessible information.

House said much of this “dark data” has been forgotten or unused. His team hired someone to go through state archives in Zambia where they found hand-painted maps on linen from the 1920s, covering the whole country and describing the land and any outcropping bodies.

“We have fully digitised them and now we can look at the data through spectral satellites,” House said. “We have dozens of examples like this.”

These methods are helping Kobold build a “Google Maps” of the Earth’s crust, House said. Once the company has a sense of where valuable minerals have been overlooked, it sends teams in to collect more data.

In northern Quebec, a team of six took data and rock samples at 839 locations along 142km of traverses. The exploration included 12 weeks of manning a helicopter equipped with an enormous metal detector — 115 feet across and 1,700 pounds — that would send out electromagnetic pulses a third of a mile into the earth in the search for minerals.

Kobold is, in some sense, a sophisticated real estate play. Once it has done the work, it buys the mining rights and will form partnerships with mining majors to split the revenue. In northern Quebec, it purchased the right to nearly 200,000 acres of land.

But the work does not always result in a gold mine of metals. Even after they have done months of work on a location, there is still “a reasonable chance” that no minerals can be mined profitably. In Quebec, for instance, House said “the potential (value of minerals at the site) is from zero to multiple billions.”

“Our objective is a 20 per cent success rate — that would be way better than standard practice,” said House.

Connie Chan, a partner at Andreessen who has backed two funding rounds for Kobold, said the proof points behind its methods convinced her that mining is “ripe” for digital disruption, especially given the need for new discoveries to make electric vehicles a reality.

“These aren’t rare metals,” she said, referring to lithium, nickel, cobalt and copper. “The crazy thing is that cobalt is as common as tin, but until Tesla stepped on to the stage we just didn’t need much of it, so no one had the financial incentive to go explore for it.”

Experiment at UK’s JET facility boosts hope that clean power source could soon be harnessed commercially

European scientists have set a new record for the most energy to be generated from nuclear fusion, the latest breakthrough in a decades-long effort to produce power by harnessing the reaction that powers the sun.

A team of researchers from the Eurofusion consortium produced 59 megajoules from a sustained reaction lasting five seconds — enough power to boil about 60 kettles — in an experiment at the Joint European Torus facility in Oxford, England.

“These landmark results have taken us a huge step closer to conquering one of the biggest scientific and engineering challenges of them all,” said Ian Chapman, chief executive of the UK’s Atomic Energy Authority.

JET, a collaboration between EU member states, Switzerland, the UK and Ukraine, founded in 1978, is the world’s largest, most powerful operational “tokamak” machine. The design, pioneered by Soviet scientists in the 1950s, uses powerful magnets to hold a plasma of two hydrogen isotopes — deuterium and tritium — in place as it is heated to temperatures hotter than the sun so that the atomic nuclei fuse, releasing energy.

In half a century of experiments around the world scientists have been unable to generate more energy from a fusion reaction than the power-intensive system consumes.

Arthur Turrell, whose book The Star Builders charts the multi-decade effort to achieve fusion energy, said the successful test, which more than doubles the previous energy output record of 22 megajoules, achieved by JET in 1997, was a big step forward. “In terms of power it’s equivalent to about four wind turbines . . . that’s close to industrial scale.”

Unlike nuclear fission, when atoms are split, fusion does not produce significant radioactive waste. But the biggest challenge to make fusion commercial is how to sustain the reaction and prevent it from extinguishing.

This meant sustaining the power output for five seconds was particularly significant, said Turrell. “That might not sound that impressive but five seconds is an incredibly long time on nuclear timescales,” he said.

The progress made at JET is expected to feed in to future experiments at Iter, the world’s largest nuclear fusion project, currently under construction in France at a cost of more than $20bn.

“If we can maintain fusion for five seconds, we can do it for five minutes and then five hours as we scale up our operations in future machines,” said Tony Donné, head of the Eurofusion consortium that ran the experiment.

Fusion energy has plenty of sceptics given how long it has taken to make progress but its promise as a tool to fight climate change has increased interest over the past decade.

Fusion-power would emit no greenhouse gases and supplies of the chemical inputs are essentially inexhaustible. There are approximately 5g of deuterium in every bathtub of seawater and while tritium is less accessible it can be extracted from the commonly occurring metal lithium, or generated in the reaction itself. A small glass of fuel could theoretically power a house for hundreds of years.

JET and Iter are two of several large, publicly funded fusion projects around the world but private sector money has also been flowing into fusion energy start-ups. Total private sector financing had reached more than $3bn by the end of 2021 with some of the ventures aiming to deliver commercial power in the 2030s.

George Freeman, UK minister for science, research and innovation, said the UK was committed to helping fusion energy succeed. “We are determined to make sure we adopt it in our energy mix and make clear to the energy sector that this technology is coming.”

Hui Ka Yan says world’s most indebted developer is working to deliver more than half a million units

Evergrande’s shares rose after its chair ruled out asset fire sales and pledged to complete half its remaining projects over the rest of the year, as the world’s most indebted developer battled to deliver units to homebuyers.

Hui Ka Yan said in comments reported by state media that the developer would deliver 600,000 units in 2022, months after work at hundreds of the company’s projects stalled during a crisis that has engulfed China’s property sector.

The company’s shares were 3 per cent higher in afternoon trading in Hong Kong, having fallen almost 90 per cent over the past 12 months. The broader Hang Seng China Enterprises index of Chinese companies listed in Hong Kong was up 0.3 per cent.

Evergrande first began missing bond payments in September and defaulted on its debts at the end of last year as it entered the biggest restructuring process in China’s history.

The group, with more than $300bn in liabilities, has become a test case for the vast borrowings underpinning China’s real estate sector, which has for decades anchored the country’s economic growth. Last year, the sector entered a severe slowdown after President Xi Jinping’s government introduced reforms to limit leverage.

Is China's economic model broken?

The rare comments from Hui, which were made at a company meeting over the weekend, followed intense scrutiny of his wealth, including luxury properties in Hong Kong where Evergrande is listed.

The developer and the government have prioritised the completion of hundreds of real estate projects on the mainland, where homebuyers often purchase flats before they are built.

Last year, US investor Oaktree Capital took control of an Evergrande project near Shanghai, and appointed receivers at another development it lent against in Hong Kong last month.

Bondholders in international markets, in which Evergrande has borrowed about $20bn, have complained about a lack of engagement from the company and warned over potential legal action. They have closely watched its offshore assets, including equities of its electric vehicle and property management subsidiaries in Hong Kong, for signs of a fire sale.

The crisis has spread through the wider offshore Chinese high-yield market, where yields have risen to levels last seen during the financial crisis. Bond prices of developers once viewed as safe have plummeted.

Shimao, a developer that previously held an investment-grade rating, has pursued rapid asset sales to raise cash ahead of debt deadlines this year.

Dealogic, the data firm, said this week that issuance in the Asian high-yield market, excluding Japan, has fallen to its lowest level in six years because of the turbulence in the Chinese property sector. Issuers raised just $4bn in January, compared with $19bn in the same period a year earlier.

Consumer goods group announces €3bn share buyback plan following abortive bid for GlaxoSmithKline unit

Unilever has ruled out pursuing major acquisitions “in the foreseeable future” after an abortive £50bn bid for GlaxoSmithKline’s consumer health business sparked a backlash from shareholders.

Instead, the maker of Dove soap, Hellmann’s mayonnaise and Domestos bleach said on Thursday that it would buy back up to €3bn of shares over the next two years as it seeks to appease an investor base frustrated by the group’s languishing stock price.

“We have engaged extensively with our shareholders in recent weeks and received a strong message that the evolution of our portfolio needs to be measured,” said Alan Jope, chief executive. “We therefore do not intend to pursue major acquisitions in the foreseeable future.”

Unilever announced its strongest full-year sales growth in nine years at 4.5 per cent, but said rampant cost increases would hit margins over the coming two years, with €2bn of input cost inflation expected in the first half of 2022.

“The major challenge of 2021 has been the dramatic rise of input costs,” said Jope. Graeme Pitkethly, chief financial officer, said this type of inflation — which includes commodity and transport costs — across the consumer goods sector had reached 20 per cent.

Unilever said price rises would help take sales growth to between 4.5 per cent and 6.5 per cent this year, but its underlying operating margin was expected to decline by between 140 and 240 basis points after coming in at 18.4 per cent in 2021.

Margins are expected to remain below 2021 levels in 2023, the company said, before being fully restored in 2024.

Bruno Monteyne, an analyst at Bernstein, said the margin drop represented “a total change of direction” after Unilever cut advertising and spending on promotions to help deal with the results of inflation in 2021.

Analysts said the magnitude of the margin squeeze appeared to indicate a lack of confidence in the pricing power of Unilever’s brands.

“In our view investors’ main focus should be on the margin guidance and the lack of pricing power that it implies,” said James Edwardes Jones, analyst at RBC Capital Markets.

Unilever shares fell 3 per cent to £37.11 in early morning trading on Thursday.

The company faces additional pressure from the arrival of activist investor Trian Partners on its shareholder register.

Following the failed bid for the GSK unit, the company last month announced a reorganisation into five business groups that will entail 1,500 management job cuts and result in €600mn of cost savings over two years.

But many investors remain unhappy. One top-10 shareholder told the Financial Times they wanted the company to separate the food division from the rest of the business.

However Pitkethly said on Thursday that “separation isn’t straightforward as a path to value creation . . . nutrition and ice cream remains a core part of the company”.

Some investors are also seeking management change. A top-20 investor told the FT at the weekend that the company’s chair, Danish businessman Nils Andersen, should leave.

A top-25 investor said: “Nils Andersen has not done a great job. I would love to see a heavy-hitting, super impressive chair at Unilever. He’s not one of those.”

The group has underperformed rivals such as Nestlé and Procter & Gamble, where Trian founding partner Nelson Peltz sat on the board for three years.

Ahead of Thursday’s results Unilever’s shares had already fallen just over 4 per cent this year and 7.2 per cent since Jope became chief executive at the start of 2019.

Offer made as UK-listed telecoms group comes under pressure from activist investors to restructure

French billionaire Xavier Niel’s telecoms group Iliad has offered more than €11bn to buy Vodafone’s Italian business, said people familiar with the matter.

The bid represents a valuation of roughly seven times earnings before interest, taxes, depreciation and amortisation. That compares to Barclays Capital’s estimate that the business is worth an enterprise value of €6.9bn, or equivalent to 5.2 times its expected ebitda in 2022.

The attempt at consolidating the crowded Italian market is a bold one by Niel given that Iliad only entered the country in 2018 and remains the fourth-largest mobile player, with about 8 per cent market share. UK-listed Vodafone has roughly 28 per cent market share in mobile on par with leader Telecom Italia’s TIM brand, according to the Italian telecoms regulator Agcom.

The offer is a sign of how Niel still has ambitious expansion plans after having taken Iliad private last year over concerns that public investors were undervaluing the business. The billionaire sees opportunities to expand in European telecoms outside of Iliad’s home market of France, and has also expanded the company via acquisitions in Poland in recent years.

For the deal in Italy, Iliad has lined up financing from a large European bank and received the backing of an unnamed investment fund to help finance the takeover, said the people.

Vodafone declined to comment on the details of the offer. Italy is its third-biggest market in terms of revenue after Germany and the UK.

Karen Egan, an analyst at Enders Analysis, said the Iliad offer was attractive. “Take the money and run,” she said of Vodafone. “That’s a very full takeover multiple and it definitely includes a share of the upside from consolidation,” referring to improved market conditions for companies operating in a market with fewer competitors.

Some analysts reckon Vodafone’s Italian business is worth more though. In a note published on February 7, Deutsche Bank analyst Robert Grindle said that “in the event of a full sale we expect the multiple to begin with an 8 not a 7”.

Vodafone has come under pressure from the recent arrival of activist investor Cevian Capital, which has urged the telecoms group to restructure its portfolio, strengthen performance in key markets, and refresh its board so as to improve its lagging share price.

A second activist investor, Coast Capital Management, has also taken an undisclosed stake, and told the Financial Times that it supported the company and its leaders and would “defer to management to decide the right choice” with respect to the Italy bid.

Egan said a sale to Iliad could potentially “resolve Vodafone’s leverage issues”, noting that even a sale valuing the business at 5.2 times ebitda could cut Vodafone’s net debt-to-ebitda ratio from 2.9 times at the end of the first half of the year to around 2.65 times.

Meta’s external advisory organization issued new recommendations Tuesday, urging the company to bolster its policies that protect users against doxing.

Facebook requested advice on the policy last year, acknowledging that it had difficulty balancing access to public information with privacy concerns. The company now known as Meta’s current policy on sharing private identifying details carves out an exception for cases when that information becomes “publicly available:”

We remove content that shares, offers or solicits personally identifiable information or other private information that could lead to physical or financial harm, including financial, residential, and medical information, as well as private information obtained from illegal sources. We also recognize that private information may become publicly available through news coverage, court filings, press releases, or other sources. When that happens, we may allow the information to be posted.

Citing how this kind of harm can be “difficult to remedy” — i.e. once someone’s address is out in the wild it’s impossible to put that cat back in the bag — the Oversight Board recommended that Meta remove the exception in its Privacy Violations Policy allowing “publicly available” home addresses and identifying images. The new rules would be “more protective of privacy” according to the board, in light of the unique risks that erring on the side of too little caution poses.

“Once this information is shared, the harms that can result, such as doxing, are difficult to remedy,” the Oversight Board wrote. “Harms resulting from doxing disproportionately affect groups such as women, children and LGBTQIA+ people, and can include emotional distress, loss of employment and even physical harm or death.”

The board’s recommendations would create a few common sense exceptions, like in the case of sharing an image of a residence that is the focus of a news story or when someone shares a picture of their own home. The group still advises Meta disallow images of private addresses shared for the purposes of organizing protests.

The Board also argues that Meta should allow residential imagery to be shared if a protest is being organized at “official residences provided to high-ranking government officials” like federal and local government leaders and ambassadors, otherwise an event planning to demonstrate at a location like the White House might run afoul of the rules.

So why not park some there? Go on, live a little.

Over the past two years, it has felt like almost everyone — from Jay-Z to Shaq O’Neal to Bill Ackman — had listed a cash shell on the stock market.

The vehicle — known as a Spac, or special purpose acquisition company — involves herding a group of seasoned and/or celebrity investors together, picking a catchy company name, and then trying to convince Joe retail pumper Public to chuck money into it. Which, since 2020, has been done almost too readily. In 2021 alone, over $150bn alone was raised.

The newly cash-rich “company” then sets out to find to a quality private business to gobble up. Which, in theory at least, should make everyone rich in the process. If the cash isn’t spent, it gets returned within a set time limit.

The problem is, the boom has rapidly turned to a bust. Over the past six months, according to Goldman Sachs, the average post-acquisition Spac has declined 43 per cent with some seeing almost all their value wiped out, like British electric vehicle company Arrival, which is down nearly 90 cent from its all time highs.

You might instinctively think, then, that now Spac-mania has turned to a Spac-splat, we’d soon be hearing the end of it.

Yet there’s a slight wrinkle here: despite the dreadful market sentiment, there’s still an awful lot of cash sitting in Spacs looking for a target. How much, you ask? Well, as of February 3, $144bn to be exact:

Via Goldman:

According to the analysts at Squiddy, 406 of these idle Spacs are set to expire by the first half of 2023. Which, if you ask us, is quite a wait to get your money back.

Still, patience seems to have its place in markets. The excellent Jon Sindreu of the Wall Street Journal has a neat Heard on the Street column up this morning about hedge funds using these driftwood vehicles as places to park their cash.

From the article:

SPACs can indeed play this role if bought at the right time, which may be counterintuitive but has long been known among hedge funds. It stems from the minutiae of how the vehicles work: Investors are allowed to demand their money back before a merger is completed, or once SPAC sponsors run out of time to find a target—often after two years. Meanwhile, the cash is placed in a trust that earns interest from ultrasafe securities. What is more, whenever negative market sentiment pushes SPAC stocks below the value of their share of the trust, investors who buy in are guaranteed extra returns at maturity—and without ever holding a single share in an air-taxi company.

What’s more, if your Spac-as-cash choice does end up doing a deal with a company in an over-hyped sector, it might suddenly moon even before the merger is completed. So you get all the safety of cash, and a higher yield to boot, with the upside of a stonk.

Sounds almost too good to be true.

Lawmakers are considering whether agency needs additional authority to police market

WASHINGTON—The nation’s top derivatives regulator is set to testify Wednesday about cryptocurrencies before a congressional panel that is weighing the need for new legislation to bring the volatile asset class under government oversight.

Rostin Behnam, the recently confirmed chairman of the Commodity Futures Trading Commission, is appearing before the Senate Agriculture Committee for a hearing examining risks, regulation and innovation in the cryptocurrency industry. Additional witnesses include billionaire cryptocurrency entrepreneur Sam Bankman-Fried.

Regulators in the Biden administration have likened the $1.7 trillion cryptocurrency market to the Wild West and said it lacks the safeguards that protect investors in stocks, bonds or commodities. But they have struggled to apply the decades-old laws that govern those markets to the cryptocurrency industry, which is furiously lobbying Washington to avoid being regulated by the Securities and Exchange Commission.

Both the CFTC and SEC cracked down on cryptocurrency projects and trading platforms they have considered to be breaking the law or defrauding investors.

But neither agency has sought to fully oversee the two largest cryptocurrencies: bitcoin and ether. Together the two represent more than 60% of the entire market.

That is partly because many lawyers believe the two assets are, for legal purposes, commodities that fall outside the SEC’s jurisdiction, and partly because the CFTC only has the power to regulate derivatives, as opposed to spot markets.

The top-ranking Republicans and Democrats on both the House and Senate agriculture committees sent Mr. Behnam a letter last month asking whether he saw any shortfalls in the CFTC’s ability to police cryptocurrencies. “It is imperative that customers are protected from fraud and abuse and that these markets are fair and transparent,” the lawmakers wrote.

Mr. Behnam has previously said the CFTC is prepared to take a larger role. But he has noted that would require Congress expanding the agency’s authority through legislation, as well as its funding.

Cryptocurrency lobbyists have urged the Senate Agriculture Committee, which oversees the CFTC, to assert its jurisdiction over their industry and avoid ceding regulatory turf to the SEC. They say the SEC’s rules for traditional securities like stocks and bonds would be impossible for most cryptocurrencies and trading platforms to comply with.

“I expect several members to make arguments for CFTC authority,” said Michelle Bond, head of the Association for Digital Asset Markets, in an emailed statement. “This will be the first comprehensive public hearing on digital assets for the members who are still formulating their views on digital assets.”

• Two biggest brewers control 65% of market
• Outdated laws date back to end of Prohibition in 1933
• Treasury will streamline tax reporting
• States urged to review anticompetitive impacts of laws

WASHINGTON, Feb 9 (Reuters) - The U.S. Treasury Department on Wednesday flagged concerns about consolidation in the $250 billion annual U.S. alcohol market and outlined reforms it said could boost competition and save consumers hundreds of millions of dollars each year.

New merger and acquisition scrutiny, different tax rates and lifting regulatory burdens to new entrants in the wine, beer and spirits market would make the market fairer for new brewers and cheaper for consumers, according to 63-page Treasury report.

The long-awaited report, due to be released later Wednesday, is part of a July executive order on competitiveness and the latest push by the Biden administration to fight what it calls excess consolidation in industries from meatpacking to shipping.

The Treasury received over 800 public comments on the issue, then suggested stiffer Department of Justice and Federal Trade Commission oversight and new rule-making in the report, which was viewed by Reuters.

The U.S. market for beer, wine and spirits has spawned thousands of new breweries, wineries and distilleries over the past decade.

But a web of complicated state and federal regulations, some dating back to the end of Prohibition in 1933, coupled with "exclusionary behavior" by massive producers, distributors and retailers means small entrants can struggle to compete and flourish, U.S. officials said.

The two largest brewers selling beer in the United States - Anheuser Busch InBev (ABI.BR) and Molson Coors (TAP.N) - account for 65% of U.S. beer revenues.

"We're determined to protect what has been a successful, vibrant industry with a lot of small businesses entering it," while tackling issues that "lead to excessive prices for consumers," said one senior U.S. official.

So-called "post and hold" laws, which restrict price competition, mean beer consumers alone pay $487 million a year than they should, and can drive up the cost of a bottle of wine by up to 18% and a bottle of spirits by over 30% the report said, citing studies.

The DOJ and FTC, who share the work of antitrust enforcement, should take a closer look at proposed acquisitions of smaller players by bigger ones, given past claims that such deals would lower prices had failed to materialize, Treasury said.

The report also called for the Treasury Department's Alcohol and Tobacco Tax and Trade Bureau (TTB) to change labeling rules to protect public health and to limit the impact of lobbying. As of 2017, alcohol companies reported 303 lobbyists in Washington.

U.S. states - which control the bulk of oversight - should examine the anticompetitive impact of regulations and franchise rules on small producers, Treasury said.

Owner of Dulux paint brand expects supply chain problems to ease significantly by mid-year

Europe’s biggest paint maker Akzo Nobel has warned that prices will rise as much as 16 per cent in the first three months of the year, but said raw material costs had peaked thanks to a slowdown in China’s construction market.

The owner of the Dulux paint brand said prices would rise between 14 and 16 per cent year on year in the first quarter, after it incurred €769mn in extra costs because of inflation. This compares to price rises of 12.5 per cent in the final three months of last year.

Supply challenges including higher raw material prices, limited availability and transport issues in the final three months of the year led to a near-30 per cent fall in quarterly adjusted operating profit to €209mn, narrowly missing analyst forecasts, on revenues of €2.4bn.

However, Akzo Nobel, which sells its products to consumers through retailers and to industrial users such as auto and aerospace companies, forecast the industry’s supply chain problems would ease significantly by the middle of this year, reducing pressure on prices.

Chief executive Thierry Vanlancker said raw material costs were starting to level off, helped by a cooling of demand in the Chinese construction market.

“Consumption in raw material producing countries like China has not been very strong,” he said. “What we do see looking forward is a normalisation or more of a plateau [of supply chain disruption] for the remainder of the first quarter and second quarter and then step by step getting more normal.”

A liquidity crisis for property developer Evergrande has led to a loss of confidence in the Chinese real estate sector.

In response to the slowdown, Chinese suppliers of raw materials such as resins, pigments and solvents have been exporting more to Europe and signing longer term contracts, helping Akzo Nobel and other paint companies to rebuild stockpiles, Vanlancker said.

The North American market, however, is likely to suffer supply chain disruptions for longer, he added, partly because of labour shortages.

US competitors PPG and Sherwin-Williams gave gloomier assessments on supply chain problems and inflation last month.

Shares in Akzo Nobel rose 3.9 per cent on Wednesday, after returning to a similar level at the end of 2019. the shares peaked last August thanks to a rise in demand for paint as people undertook DIY projects during the pandemic.

Gunther Zechmann, an analyst at Bernstein, said Akzo Nobel had shown “immense pricing strength” to pass costs on to consumers but more would be needed to cover all the extra costs.

“The market’s main concern will be demand destruction from higher prices,” he said.